The EURUSD price opened today’s trading with strong bearish gap that pushed the price to touch the extended waited target at 1.0220$, affected by Trump decision to impose Tariffs on Canda and Mexico, and mentioning the chances of expanding the Tariffs to reach the European Union countries, to fall under expected negative pressure in the upcoming period, noting that breaking the current areas will push the price to visit 1.0100$ barrier as a next main station.

Therefore, we expect to witness more decline in the upcoming sessions, noting that failing to break 1.0220$ will lead the price to start recovery attempts and head to test 1.0325$ initially.

The expected trading range for today is between 1.0140$ support and 1.0300$ resistance

Trend forecast: Bearish

The GBPJPY pair provided more negative closings recently below 194.10 barrier, hinting its surrender to the domination of the bearish bias to notice crawling towards 190.20 this morning and record some negative targets mentioned in our previous report.

Note that the negative momentum coming by the major indicators will increase the chances of attacking 189.50 support line, while breaking it will confirm its preparation to resume the negative attack until reaching 188.15 followed by reaching the next support at 187.55.

The expected trading range for today is between 189.50 and 192.00

Trend forecast: Bearish

February 2, 2025 – Written by Frank Davies

STORY LINK Pound to Dollar Rate Forecast: GBP/USD to Open at Best 2025 Levels?

Foreign exchange analysts at UBS expect that the Pound to Dollar exchange rate (GBP/USD) will dip below 1.20 in the first quarter of this year before a recovery to 1.29 at the end of 2025 as the dollar loses ground.

Goldman Sachs expects a firm Pound tone, but that dollar strength will pin GBPUSD to 1.20 at the end of 2025.

GBP/USD hit 20-day highs above 1.25 during the week before a retreat to below 1.2400 amid trade fears.

Tariffs will certainly be a key short-term focus for the dollar and Pound given the economic and financial-market implications with the threat of high volatility.

On February 1st President Trump announced 25% tariffs on goods from Canada and Mexico with a lower 10% duty on Canadian oil.

Trump used the International Emergency Economic Powers Act (IEEPA) to impose tariffs from February 4th.

Trump also promised that 25% tariffs would also be applied to the EU.

There is still a high degree of uncertainty given the potential for negotiations and legal challenges, but the dollar could post near-term gains.

Trade tariffs will tend to damage risk appetite which will undermine the Pound.

There are also expectations that there will be domestic price increases which will make it more difficult for the Federal Reserve to control inflation.

According to Bank of America (BoA); “Overall it remains an environment that will likely be USD supportive in the near-term.”

The Fed held interest rates at 4.50% at the latest policy meeting which was in line with strong consensus forecasts.

At this stage, markets expect two rate cuts for the year with June the most likely timing for the first move.

Nordea commented; “With the possibility of import tariffs and a reduction of immigrant workers lifting inflation, the Fed will probably not feel confident that inflation risks have abated just from a couple of lower CPI prints. We therefore see it unlikely that the Fed will cut rates before the summer, and most likely they will not cut at all in the foreseeable future.”

BoA is not convinced dollar strength will be sustained; “Further out, we still see some downside US growth risks due to rising trade tensions and tighter immigration policies. While the Fed has shifted its tone, any notable turn lower in the labor market, or significant renewed progress in terms of moving inflation pressures lower, will likely spark renewed calls for more rate cuts than currently priced.”

Goldman expects a strong dollar, but did note some risks; “That said, the moves this week are a reminder that a key risk to our view is a repeat of 2017-style policy outcomes, when actual trade policy was largely unchanged—despite a lot of sound and fury—and the Dollar more than reversed its post-election gains.”

The Nasdaq index posted sharp losses after Chinese company DeepSeek claimed that it had created an AI application at a much lower cost than those developed by the US tech sector.

In response, there were heavy losses in the tech sector, but confidence returned later in the week.

Nomura commented; “If the US equity sell-off remains intense and continues in the coming weeks (e.g., Nasdaq is down ~20% or more from the peak), this could lead to a weaker USD.”

There are strong expectations of a Bank of England (BoE) interest rate cut to 4.50% from 4.75% while the medium-term outlook will be very important for the Pound.

According to ING; “Fiscal consolidation in March and a drop in services inflation through the second quarter should lead to a 100bp BoE easing cycle this year. This compares to just 68bp of easing priced by the market today. We see no reason to change our end-year GBP/USD forecast of 1.19/20.”

MUFG expects a dovish BoE stance; “We expect the communications and forecasts next week from the BoE to signal the scope for the MPC being more active in cutting rates this year.”

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February 2, 2025 – Written by David Woodsmith

STORY LINK Pound to Euro Week Ahead Forecast: GBP/EUR to Gain on Trump’s Tariffs?

Foreign exchange analysts at Bank of America still forecast that the Pound to Euro exchange rate (GBP/EUR) will strengthen to 1.25 at the end of 2025.

In contrast, ING forecasts that Pound Sterling (GBP) will retreat to 1.1765 against the Euro (EUR) currency.

Pound Sterling secured a net gain to around 1.1950 during the week amid further concerns over the Euro-Zone outlook with no major UK developments.

The US tariff developments will be a key near-term focus.

On February 1st President Trump announced 25% tariffs on goods from Canada and Mexico with a lower 10% duty on Canadian oil.

Trump used the International Emergency Economic Powers Act (IEEPA) to impose tariffs from February 4th.

Trump also promised that 25% tariffs would also be applied to the EU.

There is still a high degree of uncertainty given the potential for negotiations and legal challenges.

If, however, tariffs go ahead for a sustained period, there will be a negative impact on the Euro area and UK economies.

Berenberg Chief Economist Holger Schmieding commented; “For Europe, this is a mild negative in the sense that (Canada’s) negotiations with Trump did not yield a last-minute result and the European response has been to negotiate.”

Most investment banks consider that the EU is more vulnerable.

Bank of America (BoA) commented; “Crucially, the UK runs a trade deficit with the US, including a small deficit in the goods balance, which is the focus of “regular tariffs.” This leaves the Eurozone’s exports, heavy on autos and machinery, more exposed than those of the UK.”

It added; “We therefore like selling the upside above 0.8570 over the initial phases of the likely tariff impact.” (Buying GBP/USD on any dips to around 1.1670)

BoA also injected a note of caution; “tariffs could weigh further on EUR but bearishness getting stretched.”

According to Lloyds Bank; “The reality is that the challenges Europe faces have not disappeared and although sentiment might have steadied, the starting point is brittle.”

It added; “Increasing global trade frictions also reminds that the euro looks on the expensive side when measured on a real effective exchange rate basis.”

The ECB lowered the deposit rate by 25 basis points to a 22-month low of 2.75% which was in line with consensus forecasts.

Bank President Lagarde stated that the Euro-Zone economy will remain weak in the short term with risks still biased to the downside, but there is scope for a rebound later in the year.

According to flash data, Euro-Zone GDP was unchanged in the fourth quarter of 2024 compared with expectations of a 0.1% increase for the quarter with a 0.2% contraction for Germany.

Wells Fargo commented; “We see downside risk to our moderate Eurozone 2025 GDP growth forecast of 0.9%. Even with some lingering inflation pressures, the modest growth backdrop means ECB policymakers continue to signal easier monetary policy ahead.”

The UK economic outlook and bond market will be a key short-term influence.

Yields have stabilised and the Bank of England announced a new tool to support the bond market if stresses intensify.

According to ING; “While these efforts to restore confidence are very welcome – and have helped the sterling trade-weight index recover about 1% from lows earlier this month – we still feel sterling is vulnerable.”

There are very strong expectations that the BoE will cut interest rates to 4.50% at this week’s policy meeting.

The pace of rate cuts over the remainder of the year will be a key element.

ING added; “Fiscal consolidation in March and a drop in services inflation through the second quarter should lead to a 100bp BoE easing cycle this year. This compares to just 68bp of easing priced by the market today.

UBS expects rate differentials will be important; “the BoE is easing policy from a tight level, meaning that the existing rate differentials should continue to support total returns via the carry component. We also see EURGBP spot risks as skewed a little lower over time to 0.82 by year-end. (1.22 for GBP/EUR)

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Fundamental Analysis & Market Sentiment

I wrote on 19^th January that the best trade opportunities for the week were likely to be:

• Short of the EUR/USD currency pair. Unfortunately, his currency pair rose by 2.07% over the next week.
• Long of Bitcoin in USD terms following a New York close above $106,187. This did not set up.
• Long of Corn futures. Corn futures rose by 0.45% over that week.

The weekly loss of 1.62% equals 0.54% per asset.

Last week saw several very key data releases, and the directional movement was above average:

1. US Federal Reserve Policy Meeting – the Fed left its interest rate unchanged as widely expected, but the Fed also gave a minor hawkish tilt as it made clear it was in no rush to cut rates further over the near term.
2. US Core PCE Price Index – this was expected, showing a month-on-month increase of 0.2%.
3. European Central Bank Policy Meeting – no surprises with the 0.25% rate cut, but the Bank warned about the deteriorating Eurozone economy, and this helped push the Euro to fall in value over the week.
4. US Advance GDP – this was considerably lower than expected, showing an annualized rate of only 2.3% when 2.7% was expected, giving a tailwind to the recent decline in the USD.
5. Bank of Canada Policy Meeting – cut rates by 0.2% as expected, for the sixth consecutive policy meeting.
6. German Preliminary CPI – surprisingly, this was negative at -0.2% over the month, when a 0.1% increase was expected, suggesting declining inflationary pressure, which may increase pressure for further rate cuts and help sink the Euro.
7. Australian CPI – this was a fraction lower than expected.
8. Canadian GDP – this showed a decline a fraction lower than expected, confirming the recent weakening of the Canadian economy.
9. US CB Consumer Confidence – a fraction lower than expected.
10. US Employment Cost Index – exactly as expected.
11. US Unemployment Claims – this was a little better than expected.
12. Chinese Manufacturing PMI – this was a little worse than expected.

Last week’s key takeaways were:

1. A general continuing decline in inflation and the continuation of rate cuts in G7 nations, with the notable exception of the USA, which is finding inflation sticky although not far from its 2% target.
2. US President Trump has made good on his threats to impose tariffs on Canada and Mexico and China, with new tariffs taking effect last Saturday of 25% on Canada and Mexico (only 10% on energy imports) and 10% on China. President Trump has also begun to threaten BRICS nations with a 100% tariff if they do not drop plans to create an alternative global reserve currency to the USD.

Interestingly, these two developments should be helping an increase in the relative value of the USD, which is still in a valid long-term bullish trend. The US Dollar Index did increase in value last week, after a few weeks of relative weakness.

Canada has just responded to the new US tariffs by imposing a blanket 25% tariff on all imports from the USA.

Both the US and Canadian Dollars look likely to be interesting currencies to watch over the coming week, which will likely put the USD/CAD currency pair in focus over the coming days.

The Week Ahead: 3^rd – 7^th February

The coming week has a lighter schedule of releases, so we are very likely to see a lower level of activity and volatility in the Forex market.

The coming week’s important data points, in order of likely importance, are:

1. US Average Hourly Earnings
2. US Non-Farm Employment Change
3. Bank of England Policy Meeting
4. US JOLTS Job Openings
5. US ISM Services PMI
6. US ISM Manufacturing PMI
7. US Unemployment Rate
8. US Unemployment Claims
9. Canadian Unemployment Rate
10. New Zealand Unemployment Rate

Monday is a public holiday in China and Thursday is a public holiday in New Zealand.

Monthly Forecast February 2025

For February 2025, I forecast that the EUR/USD currency pair will decline in value.

For January, I forecasted that the USD/JPY currency pair would rise in value and that the EUR/USD currency pair would fall in value. The final performance of this forecast was:

Weekly Forecast Performance

Weekly Forecast 2^nd February 2025

Two weeks ago, I made no weekly forecast as there were no unusually strong price movements in currency crosses, which is the basis of my trading strategy.

The Japanese Yen was the strongest major currency last week, while the Australian Dollar was the weakest. Volatility declined last week, with 37% of the most important Forex currency pairs and crosses changing in value by more than 1%. It is likely to fall further over the coming week.

You can trade these forecasts in a real or demo Forex brokerage account.

Key Support/Resistance Levels for Popular Pairs

Technical Analysis

US Dollar Index

Last week, the US Dollar Index printed a bullish candlestick that continued the long-term bullish trend, after bouncing off an area of support. There were two further price action signs:

1. The price closed right at the high of the week’s range.
2. The close was within the upper half of the previous week’s candle’s range.

The US Dollar got a tailwind last week from the Fed’s slightly hawkish tilt in its comments on inflation, and President Trump’s imposition of tariffs against Canada, Mexico, and China.

The Dollar is likely to continue rise over the coming week. The price has room to rise to at least the next resistance level at 110.00.

EUR/USD

The EUR/USD currency pair is in a valid long-term bearish trend. Just as I explained earlier about the US Dollar index, we see the same bearish technical signs. However, the price rose quite high over the previous week, so we are still some way off the long-term lows.

This currency pair often has very reliable trends, so I am generally interested in being short.

This is backed by fundamentals and sentiment. The Euro is weaker after the ECB not only cut its interest rate but more importantly, also warned against a weakening Eurozone economy, and the US Dollar is getting a boost from a hawkish Fed and the imposition of new tariffs by President Trump.

I see this currency pair as a sell. It is probably the most reliable trade opportunity right now in the entire Forex market.

USD/CAD

The USD/CAD currency pair advanced strongly last week to a new 4-year high price, continuing the long-term bullish trend ad breakout which has been ongoing for a few months now.

This trend has legs because the US economy is relatively strong while the Canadian one is relatively weak, but also, and more importantly over the short-term, President Trump has just imposed a 25% tariff on non-energy imports from Canada (energy will be subject to a 10% tariff). Canada has just announced a retaliatory 25% tariff, with Prime Minister Trudeau urging Canadians to “buy Canadian”.

These tariffs are likely, overall, to boost the US Dollar and hurt the value of the Canadian Dollar.

Technically although it is worth noting that the price gave up some of its gains, as shown by the upper wick of last week’s candlestick, this is due more to volatility than due to the end of an upwards spike.

It is quite likely that this currency pair will continue to rise over the coming week.

XAU/USD

Gold advanced last week to reach a new all-time high above $2,800 per ounce. The price gave up some of its gains towards the weekly close to end the week back below the round number of $2,800. However, looking at the weekly price chart below, we can see that the price closed above the previous record high made in December 2024.

This trend may see a relatively slow rise, but we can see how steadily and strongly Gold gained over the past year, so this looks likely to be a solid trend.

I am not sure that Gold will reach $3,000 per ounce over the coming week, but this target is certainly in sight now.

Coffee Futures

The price chart below shows that Coffee futures have been breaking out to long-term high prices over a period of more than 6 months, although last week’s strong price rise was the most aggressive seen through this time. This is suggestive of a climax, which would make going long dangerous, but the weekly closing price was very near the high price of the week, so that may not be the case.

Taking long trades when major commodities break out to new 6-month highs has historically been a very profitable trading strategy, which is the main reason that I want to be long here.

Arabica coffee has reached an all-time high, due partly to climatic factors such as the recent drought in Brazil, and partly due to political factors, both of which are working to reduce supply, while demand continues to be as high as it ever has been.

Unfortunately, Coffee futures are quite expensive and usually just too large for retail traders, but there is an ETF called COFF which can be used to participate in increases in the price of Coffee. However, note that this ETF does not always cleanly mirror the price action of coffee futures, so if you are using the ETF, be careful.

I think Coffee is a buy.

Corn Futures

Corn futures have been breaking to new highs, although the last two days of last week saw the price decline for consecutive days.

I think Corn is a buy but only if it makes a new daily high closing price.

Although we clearly have a medium or maybe long-term bullish trend in Corn, this bullish move is relatively new and may already have run out of steam, which is why I am cautious.

Many analysts see this move as mostly seasonal in nature, and do not think the price is going to make a new high and time soon.

I will be prepared to enter a new long trade if we see Corn futures make a new 6-month high closing price at the end of any day over the coming week.

Bottom Line

I see the best trading opportunities this week as:

• Long of Gold in USD terms (also known as XAU/USD).
• Long of Corn futures (CORN etf can also be used) following a daily close of the next ZC future at or above 498.
• Long of Coffee futures (COFF etf can also be used).

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• The Fed held rates during its policy meeting.

• Trump renewed his threats to impose tariffs on Mexico and Canada.

• The BoE will likely cut interest rates next week.

The GBP/USD weekly forecast shows a looming Bank of England rate cut that will likely push the pound lower.

Ups and downs of GBP/USD 

The GBP/USD pair had a slightly bearish week as the dollar strengthened and the pound fell ahead of a BoE rate cut. The greenback gained after the Fed held rates during its policy meeting and signaled no rush to lower borrowing costs. At the same time, Trump renewed his threats to impose tariffs on Mexico and Canada, boosting the US currency. 

Meanwhile, market participants looked forward to next week’s BoE policy meeting. The central bank will likely cut interest rates, weighing on the pound.

Next week’s key events for GBP/USD

Next week, market participants will focus on manufacturing business activity data from the US and the UK. Traders will also watch the Bank of England policy meeting on Thursday. Finally, the US will release its crucial monthly employment report.  

Economists expect the Bank of England to lower borrowing costs by 25-bps on Thursday. At the same time, markets will wait to see whether policymakers project more rate cuts for this year. The UK economy has slowed down significantly, piling pressure on the central bank to cut interest rates. 

Meanwhile, the US nonfarm payrolls report will show whether the labor market remains resilient. An upbeat report will convince the Fed to keep rates elevated. On the other hand, softness will increase rate cut expectations, weighing on the dollar.

GBP/USD weekly technical forecast: Bulls trigger a channel breakout

On the technical side, the GBP/USD price has broken out of its bearish channel with a solid bullish candle. At the same time, the price broke above the 22-SMA, indicating a bullish shift in sentiment. Meanwhile, the RSI trades slightly below 50, showing that bearish momentum remains. 

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The breakout comes after bears met a solid hurdle at the 1.2203 support level. Initially, the price had maintained a strong downtrend. However, the price kept puncturing the SMA resistance, showing bulls were not so weak. 

Moreover, the RSI failed to dip into the oversold region during the decline, showing bears were holding back. Bulls eventually overpowered bears at the 1.2203 support. The price will break above 1.2550 next week if they remain in the lead.

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Ethereum price (ETHUSD) fluctuates around the EMA50 that forms good resistance against the price, and stochastic loses its positive momentum clearly, waiting to motivate the price to resume the expected bearish trend for the upcoming period, which targets 3222.00$ followed by 3017.304 as next main stations.

On the other hand, we should note that breaching 3510.00$ will push the price to build bullish wave that its targets begin by testing 3680.00$ areas.

The expected trading range for today is between 3240.00$ support and 3500.00$ resistance.

Trend forecast: Bearish

• Trump emphasized his plans to impose tariffs on Canada and Mexico.

• The US economy grew by 2.3%, compared to estimates of 2.7%.

• The yen is set to end the week with an over 1.5% gain.

The USD/JPY price analysis indicates an increasing likelihood of a 25% US tariff on goods from Mexico and Canada, supporting the dollar. Meanwhile, the yen eased at the end of a strong week as BoJ remarks weighed.

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The dollar rebounded Thursday as US President Donald Trump emphasized his plans to impose tariffs on Canada and Mexico. Market participants have remained cautious, anticipating the proposed Trump tariffs. If they come on February 1 as promised, it will open the door for more tariffs, boosting the US currency. These tariffs will discourage trade between these countries and likely cause tensions. However, production and demand for US goods will increase, boosting the economy.

Meanwhile, traders also focused on US data, which showed a smaller-than-expected economic expansion. According to the report, the economy grew by 2.3%, compared to estimates of 2.7%. However, the report also revealed a significant increase in consumer spending. 

Meanwhile, the Bank of Japan chief said on Friday that the central bank must keep rates low to allow underlying inflation to increase. His remarks led to a retreat in the yen. However, Japan’s currency is set to end the week with an over 1.5% gain. The yen has soared since the BoJ increased borrowing costs last Friday.

USD/JPY key events today

• Core PCE Price Index m/m
• Employment Cost Index q/q

USD/JPY technical price analysis: Bulls challenge the 30-SMA resistance

On the technical side, the USD/JPY price has rebounded after failing to break below the 154.01 support level. However, the price still trades below the 30-SMA, showing bears are in the lead. Additionally, the RSI favors bearish momentum below 50. 

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Currently, the price is retesting the 30-SMA resistance. If it holds firm, USD/JPY will return to the 154.01 support. A break below this level will confirm a continuation of the downtrend. On the other hand, if bullish momentum surges past the 30-SMA, the price will likely retest the 156.51 resistance level. Moreover, the break would signal a shift in sentiment to bullish. 

Meanwhile, to confirm a new bullish trend, the price would have to break past the 156.51 resistance and start making higher highs and lows.

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The EURGBP price formed some correctional negative waves recently, achieving the target mentioned in our previous report by reaching 0.8355 to test the major support line that appears on the chart.

Now, stochastic exit from the oversold areas will motivate the price to form bullish waves to expect targeting 0.8400 followed by 0.8435 levels soon, while breaking the current support will confirm postponing the positivity to force the price to suffer additional losses by crawling towards 0.8345 before any attempt to achieve the previously mentioned gains.

The expected trading range for today is between 0.8350 and 0.8400

Trend forecast: Bullish

The GBPJPY pair faced strong negative pressures yesterday to notice crawling below 191.90 level and suffering some losses by touching 191.15 level, while the current positive rebound won’t allow the price to regain the bullish track due to the MA55 consolidation near 50% Fibonacci correction level at 194.10, to confirm confining trades within the negative track for the near-term trades.

Also, stochastic crawl below 50 level will increase the negative pressures to expect suffering additional losses by crawling towards 190.60 followed by reaching the next support at 189.50.

The expected trading range for today is between 190.60 and 192.60

Trend forecast: Bearish